Another way to think about this is the marginal cost of upgrading to solar: If it’s time to replace your old water heater anyway, then you’re looking at $500-$1000 to replace with a standard water heater. If you qualify for rebates the additional cost of going solar can be as little as $1000-$1500 more than you would have had to spend on a regular tank.Solar water heating as an investment: Your total investment after incentives will be around $2000. Most people will save at least $400 to $600 per year. That’s an annual 25%-35% return on investment, tax free, no capital gains tax. To beat that in the stock market you’d have to receive at least a 50% return annually, before taxes.If you bought Google stock the day it was first offered in 2004 you would have seen a tremendous return of 39% annually. But if you sold the stock you’d be taxed possibly 25% in capital gains. Using this comparison, a solar water heater is mathematically a stronger investment than Google stock!

The US is the dominant Solar PV market in the world with the remarkable growth observed during the period 2001-08. The market has grown from 168 MW in 2001 to around 1,111 MW by the end of 2008. The unprecedented growth witnessed by this market is credited to the supportive policy framework of the federal and state governments for the Solar PV technology in collaboration with high-end solar investments by major companies like First Solar, Inc., Solar World AG. The other major reason for the growth can be credited to the state of California which has accounted for 70% of the PV installations in the country. Solar PV market in California has grown rapidly due to the strong policies favoring solar energy initiated by the state government. California has taken up specific campaigns like “Go Solar” encouraging solar power in the state thereby making it the leading solar power generator in the US.

The ongoing financial crisis will not make significant impact on the growth of solar PV industry in the US. The supportive economic incentive programs at federal and state level for solar PV and the extension of the Investment Tax Credit (ITC) program will boost the future development of the US solar PV and drive further investments into the sector. The extension of ITC means that the states in the US can now ramp up efforts like solar loan programs and renewable portfolio standards (RPS) in a big way. This would spark the US solar industry’s move towards more efficient panels and lower costs. In this backdrop, the annual solar PV installations in the country are expected to increase from 280 MW in 2008 to 1515 MW by 2013. The cumulative solar PV installed capacity is expected to reach 5,293 MW by 2013. However, the credit crunch in the US is likely to affect the small players in the solar market who will be finding it difficult to compete given the credit crunch. As a result, the small scale solar companies are expected to be swallowed by the big giants thus leading to consolidation of the US solar industry.

Policies Boosting Grid-Connectivity

The Grid-connected solar PV escalated from 31% of cumulative solar PV installations in 2001 to 61% by 2008. The key to the increase in share of on-grid capacity is mainly due to the incentives provided by the federal and state governments like the Renewable Portfolio Standards (RPS), Feed-in tariff, California Solar Initiative etc. The Cumulative on-grid solar PV accounted for 677 MW in 2008 of which the state of California alone accounts for 468 MW. The other major states with the high cumulative installed capacity are New Jersey (63MW), Nevada (27 MW), Arizona (27 MW), New York (21 MW) and Colorado (21 MW). The states of Michigan announced an ambitious plan popularly known as “45-by-20” target. As part of this plan the state pledged to have 45% of the electricity to be generated by renewable energy by 2020. Washington State introduced a new feed-in tariff program for the development of renewable energy.

The Growth in the US Solar PV Cell Market

The Solar PV cell production in the US has seen a steady increase in volume over the last five years. The US PV cell production has grown from 100 MW in 2001 to reach over 300 MW by 2008 at a CAGR of 15%. The cell production companies in the US are focusing on the next wave of solar PV technologies. Currently, the US accounts for approximately two thirds of global thin-film production. First Solar, Inc. is the leader in terms of solar cell production with the US market share of 40% with a cell production capacity of 140 MW in 2008 followed by United Solar Ovonic, LLC (17%) with 60 MW capacity and Solar World (10%) with 35 MW capacity. Other companies like BP Solar (the US), Evergreen Solar and Schott Solar GmbH have also made their presence felt in the US solar cell market.

The growth in cumulative installed capacity of solar PV with supportive economic incentive programs at federal and state level. This along with increase of activity in cell production signals strong growth prospects of the solar industry in the US.

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